MPC Corporation to Acquire Gateway Inc.'s Professional Business
05 9월 2007 - 2:01PM
PR Newswire (US)
Gateway's Professional Segment Revenue was Approximately $900
Million in 2006 NAMPA, Idaho, Sept. 5 /PRNewswire-FirstCall/ -- MPC
Corporation (AMEX:MPZ) today announced that it has signed a
definitive agreement with Gateway, Inc. (NYSE:GTW) to acquire
Gateway's Professional business. The transaction is subject to
various terms and conditions to closing, including regulatory
approval. The acquisition is expected to close in early Q4. Under
the terms of the definitive agreement, the consideration paid by
MPC includes assumption of certain warranty and other obligations,
the issuance to Gateway of MPC Common Stock and MPC Series B
Preferred Stock, and a promissory note payable to Gateway in an
amount subject to adjustments described in the definitive
agreement. Based on MPC's current assumptions and estimates, the
transaction is valued at about $90 million. The assumed warranty
and other obligations are estimated at approximately $60 million.
The market value of the Common and the Series B Preferred Stock to
be issued to Gateway (assuming conversion of the Series B Preferred
Stock into Common Stock) is approximately $20 million as of
September 4, 2007 and constitutes an approximate 19.9% equity
interest in the company on a fully diluted basis. Based on MPC's
current assumptions, the principal amount of the promissory note
would be approximately $10 million as of September 4, 2007, but
such amount could vary significantly based on several factors
including the amount of inventory delivered by Gateway at close.
The promissory note would be payable to Gateway within six months
after the closing date. As a condition to close, MPC is required to
raise an additional $9 million through the exercise of a portion of
its outstanding warrants priced at $1.10. The exercise of such
warrants and the conversion of certain outstanding convertible
debentures would reduce the overhang in MPC's capitalization
structure as these debentures and warrants are converted into
common stock. The investment bank Maxim Group LLC acted as an
advisor to MPC in connection with these conversions. Combining the
Businesses Similar to MPC's business, Gateway's Professional
business targets customers in education, medium-sized business, and
government with customized solutions including PCs, peripherals and
services. This acquisition would provide MPC with the customers,
products and employees to compete at a larger scale in the PC
industry. The combined revenue of MPC and Gateway's Professional
business in 2006 would have been $1.2 billion. With this
acquisition, MPC expects to gain a more balanced portfolio of
customer segments, with strong positions in federal government,
state/local government, K-12 education, higher education, small
business and mid-sized businesses. The combined company would offer
a complete line of PCs and related products and services, with
particular emphasis in mobile products, all-in-one desktops,
servers and storage solutions. MPC would own the entire catalog of
products and services from Gateway's Professional business, and
would make them available to both MPC and Gateway Pro customers. As
part of the terms of the arrangement, MPC will migrate these
products from the Gateway brand to the MPC brand within one year.
Likewise, Gateway Professional customers would be able to purchase
the entire catalog of MPC products and services. Under the terms of
the definitive agreement, upon closing MPC would acquire Gateway's
leased final assembly facility located in Nashville, TN, including
the assembly of the Gateway Professional products that are produced
there. In addition, MPC would acquire the portion of Gateway's
Consumer Direct business that targets businesses with less than 100
employees. MPC would also immediately assume responsibility for all
operations and warranty support associated with Gateway's
Professional business. "We believe that the customers of MPC and
Gateway's Professional business will benefit greatly from this
combination," said John P. Yeros, Chairman and CEO of MPC
Corporation. "The new company will be totally focused on the
markets of government, education, and small-and-medium business,
and will develop products and services to meet the specific needs
of these customers. It will have the scale to enable it to compete
better against larger rivals in the PC industry. In addition, our
customers will gain access to a wider range of PC products and
services and continue to enjoy high-quality, US-based service and
support." "I believe that the combination of Gateway Professional
and MPC will result in a highly-focused organization that can
better compete and thrive in this competitive segment," said
Gateway CEO Ed Coleman. "The combination of MPC and Gateway's Pro
business makes good sense," said Roger Kay, president of Endpoint
Technologies Associates, Inc. "The new company's focus on the
professional segment should help solidify its position in the U.S.
PC industry." The combined company will be headquartered in Nampa,
ID with operations in Nampa, ID, North Sioux City, SD, Nashville,
TN and Denver, CO. MPC has set up a special information center on
its website with more details. The website address is
http://www.mpccorp.com/ More details concerning the transaction
will be available in a form 8-K to be filed by MPC with the
Securities and Exchange Commission. About MPC Corporation: MPC
Corporation (AMEX:MPZ), through its subsidiary MPC Computers,
provides enterprise IT hardware solutions to mid-sized businesses,
government agencies and education organizations. MPC offers
standards-based server and storage products, along with PC products
and computer peripherals, all of which are backed by an
industry-leading level of service and support. For more
information, visit MPC online at http://www.mpccorp.com/.
Forward-looking Statements Any statements in this press release,
other than statements of historical fact, are forward-looking
statements. Forward-looking statements are based on current
management expectations and assumptions. However, there is no
assurance that such expectations will occur or that the assumptions
will prove accurate. Our actual future performance could differ
materially from the forward-looking statements. Forward-looking
statements in this press release include statements with respect to
the possible acquisition of Gateway's "Professional" business unit.
The potential acquisition is subject to a number of conditions to
closing that may never be satisfied or waived, including applicable
regulatory approvals and the requirement that MPC shall have raised
at least $9,000,000 additional cash or cash equivalents through the
conversion of outstanding convertible securities, the exercise of
warrants or the sale of additional securities. The actual value of
the transaction could vary from the current estimate of $90
million, depending on a number of factors, including the actual
value of the warranties assumed, fluctuations in the value of the
MPC stock, and the calculation of the value of the promissory note
to be issued to Gateway. Statements in this press release with
respect to possible future performance or potential benefits of a
combined company are also forward-looking statements. The combined
company could fail to achieve projected revenue, margin and other
financial performance measures. A combined company would face
significant risks and uncertainties, including the ability to
retain customers and employees, retention of vendor support in
funding the combined operation, the ability to transition product
lines, the ability to effectively combine management teams, and the
ability to obtain required intellectual property licenses on terms
acceptable to the combined company or at all. Neither MPC nor the
Gateway Professional businesses have been profitable in recent
periods, and there is no assurance that the combined company will
be profitable. The interests of current shareholders would be
diluted in connection with the proposed transaction. MPC faces
significant liquidity challenges, and the combined company would
continue to face such challenges. Investors are encouraged to
carefully review MPC's risk factors set forth in its most recent
Form 10-KSB and Form 10-Q filed with the Securities and Exchange
Commission. In addition, we intend to file a Current Report on Form
8-K on September 5, 2007 that will include risk factors related to
the acquisition of the Gateway Profession Business that you should
carefully review. We will file a Form 8-K/A within 71 days that
will provide additional information regarding the acquisition of
the Gateway Professional Business including historical and pro
forma financial information. Except as required by law, we are not
obligated to provide or release publicly any revisions to these
forward-looking statements that might reflect events or
circumstances occurring after the date of this press release or
those that might reflect the occurrence of unanticipated events.
DATASOURCE: MPC Corporation CONTACT: Angela Lewton of MPC
Corporation, +1-208-893-3843, Web site: http://www.mpccorp.com/
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